The three-year contract is the first of its kind in Michigan and represents a significant move away from the traditional fee-for-service model, where reimbursement is tied to the number of procedures or tests performed with little regard for effectiveness or value. That system has helped fuel an enormous rise in health care costs, which now account for between 15 and 17 percent of the U.S. economy and are squeezing businesses and consumers alike.

As part of the deal, BCBSM will provide funding to help Trinity develop infrastructure, such as an all-patient registry, that allows for better coordination between its hospitals and their physician partners. The Livonia-based Catholic health system first agreed to pursue a value-based reimbursement model with the Blues nearly a year ago.

So what does this mean for patients? Here are some examples from news outlets that reported on the story.

Under the value-based model, Trinity’s hospitals and doctors will begin using more telemedicine and “virtual clinics” where patients through mobile technology can initially make contact with a care provider to decide whether they need to make an office visit. The goal is to avoid costly emergency room visits “as a substitute for primary care services,” Trinity Health Senior Vice President and Chief Financial Officer Ben Carter said.

Greater collaboration with Blue Cross Blue Shield and incentives that reward Trinity Health for the improved coordination of care, efficiency and quality can lead to lower overall costs, Carter said.

“This really aligns the interests of the patient, the providers and the payer to benefit the community and we will all benefit from this alignment,” he said.

Under the current system, a doctor would usually make a patient return for a separate appointment if a second health issue or question arose during a visit for something else. With value-based reimbursement, providers will be incentivized to take care of the issues in one visit, which means fewer co-pays and expenses for patients.

The arrangement also promotes the use of iPhones, iPads and other technology to allow for virtual care or telemedicine. For example, a patient could take a photo of physical symptoms and send it to the doctor for further direction, Carter said.

Trinity, which operates 12 hospitals in Michigan, will launch the new reimbursement system at its three-campus Mercy Health Partners hospitals in Muskegon and Shelby and at Saint Mary’s Health Care in Grand Rapids. The remainder of its hospitals will move under the contract in July.

BCBSM is also in conversations with other Michigan hospitals about doing the same. Experts see value-based reimbursement as a key way to improve the health care system.

Being a 34 year employee of BCBSM, I have been somewhat reluctant to voice my opinion on how outdated the fee for service payment mechanism has become. I am happy to see that the Blues are once again leading the way in developing new and innovative approches to health care reimbursement.